Hi Traders! CADJPY short term forecast update and follow up is here. On March 9th I shared this “CADJPY Technical Analysis And Short Term Forecast” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Home Trader Club. Spoiler alert – free memberships are available!
My Idea
On the H4 chart, we have a bearish divergence that has formed between the first high which has formed at 100.277 and the second high which has formed at 100.877 based on the MACD indicator. The price then moved lower and broke below the last low at 99.035 thus forming a classical setup of bearish divergence followed by bearish convergence, we may consider this as evidence of bearish pressure. As per the book scenario after a bearish convergence, we may expect corrections and then a further continuation lower. Currently, it looks like a correction is happening. In addition to this, the price has also broken below the most recent uptrend line which we may consider as another evidence of bearish pressure. Also, the ADX indicator gave a bearish signal here at the cross of -DI (red line) versus +DI (green line) and the main signal line (silver line) reads value over 25 which we may consider as yet another evidence of bearish pressure. So everything looks good here for the bears and until the strong resistance zone (marked in red) shown in the image below holds my short-term view remains bearish here and I expect the price to move lower further.
(Note: You can learn about a Killer Forex Strategy “Double Trend Line Principle” here)
CADJPY H4(4 Hours) Chart Current Scenario
Based on the above-mentioned analysis, on the H4 chart, my short-term view was bearish here and I was expecting the price to move lower further until the strong resistance zone holds. The price action followed my analysis exactly as I expected it to here. After the breakout below the most recent uptrend line, the pullback that I was looking for happened and then the price moved lower further and delivered around 500 pips move to the downside until it was blocked by a bullish divergence.
On the M15 chart, the market provided us with various facts supporting the bearish view. The price which was moving higher created a bearish divergence between the first high formed at 98.936 and the second high formed at 99.017 based on the MACD indicator. The price then moved lower and broke below the most recent uptrend line. We may consider these as facts provided by the market supporting the bearish view and also there we no signs opposing this bearish view. Then as you can see in the image below how the price moved lower further after that and provided an amazing move to the downside!
So, traders, this is why I wanted to show this example to help you understand how important it is to follow the facts. The facts were supporting the bearish view here and there were no signs against it. When the facts do happen as we expected you can see how the price perfectly moved as per the plan. Because these are the kind of hints the market provides us at the majority of the time and it’s our obligation as traders to be able to listen to these things that the market tells us and we should try to make the right actions accordingly.
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Happy Trading!
Arvinth Akash
Home Trader Club Team.
